The Dog That Didn‘t Bark
S&P 500 didn‘t break the3,905-3,910 zone, not even overnight. Most tellingly, USD couldn‘t catch a proper bid on yields turning sharply up, and commodities in the black merely confirm risk-on sentiment to win today. The bears fumbled during the European sessions, and the relative performance of value and tech highlights where to look for gains today (in the cyclicals).
See the turn in intraday appreciation for oil (always good when the laggard wakes up – silver with copper continue to lead gold, and miners are to do very well) as it relates to the dollar, and how USD‘s intraday reversal reflects on what‘s to come today – already today, and not after tomorrow‘s PPI release:
(…) The key catalyst to look for in terms of upside fuel, is Friday‘s PPI that‘s likely to show slowdown in inflation, and then Tuesday‘s CPI probably to come at 7.5 or 7.6% YoY, which would once again (in both cases) feed into the „Fed would now really go slow on tightening aka pivot“ angle that markets are way too willing to run with. Willing as in misguided, because the Fed isn‘t getting less restrictive at all – see rate hiking and balance sheet shrinking combined, effects to play out still. No better indicator of demand destruction to come than the price of oil really – sign of caution.
Referring to the title, it‘s the USD-yields-commodities interplay, which will result in nice day of real asset trailed by stocks market gains.
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Let‘s move right into the charts (courtesy of www.stockcharts.com).
S&P 500 and Nasdaq Outlook
No break of the 3,905 – 3,910 support, declining volume, and crucially the above mentioned inconsistencies within the bearish push as 3,910 didn‘t break overnight regardless of a good run at it aftermarket when the bears still had the initiative that was lost during the European session only. 3,965 followed by 3,980 are the upside levels.
Credit Markets
HYG recovered from intraday weakness into the close, and that was constructive – even if junk bonds underperformed TLT. During the European morning, the market shook this off, and will continue to add to gains.
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All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.
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